Having a second home abroad can be a real pleasure (and make you very popular with friends and family). However, it’s also a significant responsibility and can require extra consideration and administration. Understanding from the start how to look after your money when it needs to be sent between countries, or be divided between multiple bank accounts, can make owning a holiday home much simpler for you from the offset.
Things to consider when moving abroad or buying property overseas
Relocating, or splitting your time between two countries, can dramatically improve your lifestyle. However, it brings with it a number of additional concerns, from property management to international money transfers, which investors in property in a single country may not need to bother with. Before looking into overseas property, it’s worth asking yourself some key questions, including:
- Do you know how exchange rate fluctuations will affect your living costs?
- Do you know how to get the best foreign exchange rates?
- Are all your financial affairs taken care of back home? Have you set up direct debits to cover your expenses without you having to do it all manually?
- Do you know what the ongoing costs of having a property abroad will be (such as property tax, refuse and drainage fees)?
- How will you split your time between your two residences?
- What are you going to do with your least-used property? Will you rent it out, let family and friends use it, or leave it empty?
Being able to answer these questions from the get-go will help you to arrange the necessary measures and make allowances for additional expenses.
Set up a local bank account
An international bank account can make it significantly easier to manage your financial affairs. They allow you to handle multiple currencies side-by-side, making it possible for you to quickly assess the state of your finances, regardless of where or how your money is distributed. Although they do offer you the option to transfer funds between bank accounts (converting one currency into another) this is not the most cost-effective international money transfer method.
What kind of documents you will need to open an overseas or international bank account will vary depending upon the country and the bank in question. It is reasonable to assume that you will need to provide information and documentation that verifies your identity, such as your date of birth, your occupation and your passport, as well as your current address. Some overseas banks may require an official recognition of authenticity before they will accept your documents. You may need to go to the relevant government agency in order to obtain the required verification.
Make international money transfer simple with regular overseas payments services
There could be many reasons why you need to regularly transfer money from the UK to your overseas property, even after purchasing the property itself. You may be employed remotely by a UK company, or have a pension that only pays in Sterling, for instance. Even when living in your main home, you may need to arrange international money transfers abroad to cover expenses such as property maintenance or lettings agency fees. Arranging to have your funds transferred across on a regular basis – each month, for example – can be a lot of effort and come at some expense.
The regular overseas payments services offered by reputable currency brokers remove the hassle of arranging repeat transfers and ensure that your transfer will be made at a great exchange rate. Arrange the amount, date of transfer and destination bank account in advance and then rest easy in the knowledge that your money will be in your overseas account when you need it. Your broker will still secure you a highly competitive exchange rate, so you can make your funds go further. Some foreign exchange providers won’t charge you transfer fees on these payments either, which can add up to a considerable saving over an extended period of time.
Managing your money online
Keeping track of your finances becomes much more straightforward when you take advantage of online banking methods to track your money and pay relevant bills. Many banks offer online services, so you can access your money and take care of relevant housekeeping wherever you are in the world. This significantly lowers the risks of heading abroad, or returning home, without taking care of key expenses.
Online banking also makes it easier to keep track of your earnings and expenses, which is important as you may find yourself eligible to pay taxes in the country your second home is based in.
If you own a holiday home or plan to invest in one in the near future, bear in mind these key points and you could find managing your finances that bit easier.